How Much Does Income Protection Insurance Cost?

Income protection insurance provides financial security if illness or injury prevents you from working.

The cost of a policy depends on several factors, including your personal circumstances and the level of cover you choose.

Understanding what influences the price can help you find a policy that suits both your needs and your budget.

What Affects the Cost of Income Protection Insurance?

When setting your premium, insurers look at several key factors:

• Younger applicants tend to pay lower premiums, as they are less likely to make a claim. Taking out a policy earlier in life can help secure a better rate.
• Pre-existing medical conditions, smoking, and certain lifestyle choices can increase costs. Some insurers may offer more favourable terms depending on your health history.
• Jobs involving manual labour or hazardous environments often result in higher premiums, while office-based roles tend to be cheaper to insure.
• The more of your income you choose to cover, the higher the cost. Most policies offer protection for up to 60% of your earnings.
• Policies that pay out for a longer period, or until retirement, are generally more expensive. Shorter-term cover tends to be more affordable.
• A shorter waiting time before payments start (known as the deferred period) increases the premium, whereas a longer waiting period reduces it.
• The type of premium you choose can also impact cost over time. Some policies have guaranteed premiums, meaning the price stays the same for the duration of the policy, while others are reviewable, meaning the cost can increase.

Keeping Premiums Affordable

If you’re looking to manage the cost of income protection insurance, small adjustments can make a difference.

Extending the deferred period, choosing a shorter payout duration, or reducing the percentage of income covered can all help lower premiums. Comparing different providers is also worthwhile, as prices can vary.

That said, choosing the cheapest option isn’t always the best approach. The most important thing is ensuring the policy provides enough financial support if you ever need it.

If you’re unsure which option is right for you, speaking with a professional can help. UK Moneyman can explore the most suitable policies based on your circumstances.